Ola Electric shares were up 20% after Q1 results, but some analysts unconvinced

Shares of Ola Electric Mobility Ltd., the electric vehicle manufacturer, will remain in focus on Tuesday, July 15, after the company reported its April-June quarter results.

Brokerage firm Kotak Institutional Equities has maintained a 'Sell' rating on the stock, with a price target of ₹30 per share.

Kotak mentioned that Q1 losses were lower than estimated, driven by better-than-expected volume offtake (7,000 units, largely from the previous quarter’s backlog), an improved gross margins due to the Gen-3 platform shift, a reversal in warranty provisioning, and cost-control initiatives.

While the company has shown significant improvement in profitability, Kotak said volume offtake remains below expectations due to muted industry growth and rising competitive intensity, which it sees as a continuing concern.

Meanwhile, HSBC, which has a 'Hold' rating on the stock, raised its price target to ₹49 per share.

The brokerage said that after multiple misses, the strong gross margin expansion in Q1 came as a positive surprise. However, it flagged concerns that Ola Electric's cell manufacturing business may not qualify for PLI benefits, which could weigh on longer-term margins.

HSBC has raised its earnings estimates, citing better-than-expected margin improvement.

Ola Electric's results have seen a sequential improvement. Even as the net loss widened from last year, it was narrower than the loss of ₹870 crore that they reported in the March quarter.

Revenue may have halved from last year, but increased from the March quarter figure of ₹611 crore. Volumes also improved sequentially.

Gross margins have seen an improvement, not only in the June quarter, but the management sees it improving further. Gross margins are likely to improve by nearly 1,500 basis points, also aided by Production Linked Incentives (PLI) benefits.

Ola Electric mentioned in its post-earnings statement that the auto segment turned positive on an EBITDA level in the month of June and that cash generation in this segment is 'within reach'.

The company's full-year EBITDA margins are seen at 5%, in comparison to the negative 11.6% margin it reported during the June quarter.

Out of the eight analysts that have coverage on Ola Electric, three of them have a 'Buy' rating on the stock, two have a 'Hold' rating and remaining three have a 'Sell' rating.

Shares of Ola Electric Mobility are ended 19.75% higher on Monday a ₹47.6. The stock has fallen 47% from its IPO price of ₹76 and is down 75% from its post-listing high of ₹157.

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